US-Banks profit from economic optimism
JP Morgan's Balance Sheets Provide Insight into the US Economy's Condition. JP Morgan and Citigroup Report Robust Earnings - Partly Due to Special Effects. Wells Fargo's Surplus Stagnates. Many Investors are Pulling Back at the West Coast Bank due to a Warning.
The US reporting season for major institutions has begun with JP Morgan, Citigroup, and Wells Fargo releasing financial statements. US banks reported strong business in the investment sector. Companies are increasingly relying on the ability of the US economy to avoid a larger recession. Mergers and acquisitions are once again gaining prominence. In the coming week, Goldman Sachs and Morgan Stanley will report. For experts, these numbers serve as indicators for the economy's condition: "The earnings of large banks, technology companies, and consumer goods manufacturers will be the most important, as these companies are heavily dependent on the strength of the economy," said Clark Bellin, Chief Investor of Bellwether Asset Management. In Germany, Deutsche Bank will present numbers for the second quarter next week.
JP Morgan, the largest US bank by balance sheet, benefited from a special gain and solid investment banking in the spring. The bank earned more than expected, with a profit of $18 billion for the year. This included a billion-dollar special gain, attributable to the exchange of Visa shares and other one-time effects. Adjusted, JP Morgan earned $13.1 billion, less than the previous year's $14.5 billion. At the end of the second quarter, $14.5 billion had been retained. The earnings per share were $6.12, compared to analysts' expectations of $5.88. The stocks traded slightly down on the exchange.
The revenues increased by more than 50% to $50.2 billion. The special effect also played a role here. In addition, the bank benefited from high interest rates. The net interest income rose by 5% to $22.9 billion. In the Commercial & Investment Bank, revenues increased by 9%, in particular due to significant increases in fee income in investment banking.
Trading revenues increased by 10%. Revenues from trading in interest-bearing products rose by 5%, while revenues from equity trading rose by over 5%. The Wealth Management and Private Client Services divisions also saw revenue growth.
Investors Penalize Wells Fargo
Citigroup also significantly increased its earnings in the second quarter and exceeded expectations. It performed particularly well in investment banking, where revenues increased by 60%. The third-largest US bank increased its surplus by approximately 10% to $3.2 billion within a year. The earnings per share rose to $1.52 from $1.33 in the previous quarter. Revenues in the April-June period increased by 4% to $20.1 billion. In the Banking division, which includes corporate lending, revenues increased by 38% to $1.6 billion.
At Wells Fargo, the result stagnated instead. In addition, the bank from the US West Coast showed a more pessimistic outlook for net income in the full year. However, the bank still surpassed analysts' expectations. The US West Coast bank's profit was once again 4.9 billion US Dollars. The earnings per share were 1.33 Dollars. The revenues amounted to 20.7 billion Dollars. On the stock exchange, the numbers did not fare well. The papers were trading in the early session with a loss of up to seven percent.
- Despite Wells Fargo's stagnating surplus and pessimistic outlook for the full year, other major US banks like JP Morgan and Citigroup have reported robust earnings for the quarter, contributing to optimism in the US economy.
- The US banking sector, including giants like Wells Fargo, Citigroup, and JP Morgan, are closely monitored by investors in the United States and abroad, as their quarterly figures can indicate trends in the broader economy.
- As the reporting season continues with notable banks such as Goldman Sachs and Morgan Stanley, analysts at firms like Bellwether Asset Management are paying close attention to the earnings of banks, technology companies, and consumer goods manufacturers, as these sectors are heavily influenced by the state of the US economy.
